It’s a Wonderful Life and the Value of Social Capital

Yesterday I made a sales call to a local business, a nursery owned by one of my former high school classmates. Keith and I didn't move in the same circles and were never friends, but I always appreciated his good nature and quick wit. In just twenty minutes yesterday morning, I got to know him better than I had the entire time we were kids.

Like my father, Keith's dad ran his own business. Both men passed a sense of entrepreneurship on to their sons. Keith runs a successful nursery; I help run my family's box factory.

Business with friends
After discussing the boxes Keith needed for shipping his plants, we began to talk about business in general, and then about the 20-year high school reunion last summer. “You should have been there,” Keith said. “It was great to see everyone, even the people I never really knew.”

“I wanted to go,” I said. “But while you guys were partying in an Irish bar, I was actually in Ireland.” Keith laughed.

We talked about old friends. We talked about how time softens the edges in relationships. When you're growing up, you remember every hurt and embarrassing moment, from first grade to your teenage years. By the time most people are in high school, they're sensitive and raw. They're afraid that everyone remembers the time in fifth grade that they peed their pants in gym class. But after twenty years, experience allows most of us to dismiss old fears and prejudices, and to view these embarrassing moments in a different light.

I feel a deep bond with the people I went to school with as a boy. Keith does, too. “The thing of it is,” he said, “now when I meet people from high school, even people like you who I didn't know very well, I feel like I have a tie to them.”

“I know what you mean,” I said. “It's like we're all part of a club. There's a sense of camaraderie.”

“Yeah,” he said. “I feel like I can trust old classmates more than other people. Do you remember Bill M.? I didn't know him very well either, but we talked at the reunion. Turns out he owns a heating company. I needed some work done on the heaters in my greenhouses, so I called him up. I was able to send a few thousand dollars of business his way.”

“That's awesome,” I said. “I do the same sort of thing. You remember Dave C.? He's my lawyer now. I bought my car from Wayne. I have my insurance through State Farm because Lynn works there. Whenever I can, I like to do business with somebody I know.”

The value of social capital
Driving home, I thought more about our conversation: Why do I like to buy from people I know? In part, it's because I like to support local businesses. I believe that doing so helps to build social capital.

People often complain about good ol' boy networks, those loose groups of old-timers that seem to control everything. At their worst, such informal associations can foster unhealthy prejudices and favoritism. But I think there's more to them than that. At their best, these networks allow men and women to build mutual goodwill through the exchange of services and ideas in a community. They foster social capital.

There's more to wealth than just money. Social capital is as real as financial capital, and sometimes more valuable.

You generate social capital when you help your neighbor repair a fence, or have your Sunday School class over for barbeque, or join a bowling league. Any time you participate in the community, you are generating social capital, both for yourself, and for the other people involved. Individuals (and communities) with high levels of social capital are able to find help when they need it; those with low social capital can spend a lot of time frustrated and alone. (This is a very elementary description of the subject. For more information, see Bowling Alone by Robert Putnam. But be warned — it's a dry read.)

It's a wonderful life
Perhaps the concept of social capital can best be illustrated by referring to It's a Wonderful Life, the 1946 Christmas classic that most of you have probably seen a dozen times. In the film, Jimmy Stewart plays George Bailey, a man poor in financial capital but rich in social capital.

 

Bailey repeatedly sacrifices his dreams for the sake of others. Instead of traveling the world, he takes a low-paying job and raises a family in a “drafty old barn”. Again and again, he gives up his own interests to help his friends and neighbors. But it costs him, financially and mentally. When disaster strikes, Bailey decides he is worth more dead than alive, and plans to commit suicide, hoping that the proceeds from his life insurance policy can help make things right.

Ultimately, Bailey is saved. All those that he's made sacrifices for over the years come to his aid. It's a schmaltzy feel-good moment, perhaps, but it's a pointed example of social capital at work. When Bailey's brother declares that George is “the richest man in town”, he's not joking. Bailey may not have a lot of financial capital, but he's flush with social capital.

True wealth
We don't need to sacrifice our own interests to generate social capital. It's not a zero-sum game. Often, we can create win-win situations that allow everyone involved to profit. When Keith hires Bill M. to do work on his greenhouses, both men profit, and the transaction generates social capital. When I join a chess club at the senior center, I'm improving the social capital of the other members.

Sometimes as we're pursuing our financial goals — getting out of debt, saving for retirement, investing for growth — we can lose sight of the other things in our life. The holidays are an excellent time to remember that true wealth doesn't come from cash, but from our relationships with the people around us.

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J.D.
J.D.
12 years ago

I re-wrote that first sentence a dozen times. I hate to end it with a preposition, but the other options sound too damn formal. Ah, the struggles of we writers face.

moneymonk
moneymonk
12 years ago

Sounds like Rich Dad, Poor Dad

Blue
Blue
12 years ago

Great post! The intangible benefit to community involvement is probably undervalued more in the US than in other places. Ultimately people that are involved in groups – churches, charity organizations, schools etc. – are much more likely to succeed both monetarily and in sense of well being and self worth.

Have you thought of how it works with the blogging community? I would imagine linking to others and promiting inter-blog discussions (and carnivals) is a way to promote some community ties as well.

kris
kris
12 years ago

How about this?

Yesterday I made a sales call to a local business, a place owned by a fellow that was a high school classmate.

The Tim
The Tim
12 years ago

Funny coincidence. Check out my post this morning. I guess today is “It’s a Wonderful Life” day.

Curtis
Curtis
12 years ago

JD, sounds like you would fit right in here in St. Louis. Anyone who’s lived here can quote you the exact, famous St. Louis question… “What High School did you go to?” It is asked anywhere you go. Sort of like a way to find a bond even across generations.

OiVey
OiVey
12 years ago

I admire that you can see the downside with the good. Jan 07 we tried to buy a business and the owner was very hostile and generally crabby. We walked away because of his poor social skills. On the other hand, I was talking to another business person about the deal and she gave me a huge compliment. Now whenever anyone asks about Oregon gifts, I send them to her. (charleytown marketplace gifts in Charleston, oregon)

PR
PR
12 years ago

Thanks for your post today! That’s a great point of view and it’s so easy to forget the value of social capital and get caught up in pursuing financial capital.

Sometimes I just read your blog posts, other times I send them to my wife. This was definitely one to send to her!

Neil Kelty
Neil Kelty
12 years ago

Try reading: Never Eat Alone by Keith Ferrazzi – its a great book on this subject.

Note: Not a dry read 🙂

Mrs. Micah
Mrs. Micah
12 years ago

I’ve found knowing people very valuable in getting work, both employment and commissions. Of course, I also enjoy having a good social network because I’m a social being (if not always sociable).

typome
typome
12 years ago

Taking kris’ idea further:

Yesterday I made a sales call to a local business, a nursery owned by a former high school classmate of mine.

Great post!

Jordan
Jordan
12 years ago

This post is spot on. Here in Hawaii who you know (and who knows you) is the difference between getting a good job and flipping burgers in a fast food place. It is such a small place that everyone knows someone you have worked with and if you burn one bridge, everyone sees that smoke and it’s hard to explain it away. I make it a point to leave every company on a good note, even if I really hated the place, or the people I work with, because you never know when you will need them again.

JenK
JenK
12 years ago

Yes and no. Yes, there is value to taking the time to get to know people and to build and maintain relationships. Yes, it is good to remember that people are people, not machines. No, you may not always want to live where you grew up. No, you may not always know someone in whatever business. If you’ve ever found yourself putting off getting the furnace serviced or the gutters cleaned because you don’t know who to call and none of your friends do that either because they don’t know who to call … then you might want to break… Read more »

J.D.
J.D.
12 years ago

Ah, I love how other minds can bring fresh insight. I’ll use one or both of the suggestions on how to fix that first sentence. Thank you. @Neil – Here’s a piece of trivia: The single post that has taken me longest to write is my review of Never Eat Alone. I’ve been working on it for over a year now. I thought I had it ready to go recently, but Kris put her foot down. She told me it was awful. So, back to the drawing board. Some of the ideas in this post were scavenged from that abandoned… Read more »

Bethany
Bethany
12 years ago

J.D., on the first sentence – I believe it was Winston Churchill who said, “There is some shit up with which I will not put.” You’re in good company.

I could not agree more, and I do not live in my hometown. I have noticed that because I attempt to get along with the people I work with, my coworkers are more willing to help me out when I need them. The principle here holds true even if you didn’t go to high school with anybody.

As my mother said, “Invest in people and you will never be poor.”

James C.
James C.
12 years ago

Great post! The emotional bank account is what matters most…

plonkee
plonkee
12 years ago

Stuff like this fills me with dread. Although I love to help people, I’m not naturally a social person and I live more than 100 miles from where I grew up (a long way in the UK).

As it’s turned out, I probably have more social capital than I think I do, but that’s probably only because I call upon it less often than I need to.

@Blue:
There is quite a lot of community and networking in pfblogging – but then you’d expect that because it’s exactly a group of like-minded individuals.

Plan Your Escape
Plan Your Escape
12 years ago

Some great ideas there JD. It’s easy to forget that personal relationships are such important aspects of our lives. Not only do they provide opportunities for win-win cooperation, as you mention, but they also contribute a great deal to our personal happiness. We’re social beings after all!

Peter

Roger
Roger
12 years ago

I would suggest not doing business with close friends unless you know for a fact that both parties offer good value for money. A soured business deal with a casual acquaintance is one thing, a soured business deal with a life-long friend is another.

elisabeth
elisabeth
12 years ago

My family moved every 3 years until I was out of College — that means I attended two high schools, and, maybe because I didn’t have any “rooting” experiences, I also ended up attending three different institutions before I got my BA. Then I moved to Chicago, for, yes, 3 years. Now, though I do have roots — I live in the same place I’ve lived since 1978. And while I love the connections I’ve made, and it’s great to always see someone you know when you’re out doing groceries, and very much enjoy the casual connections we have with… Read more »

Patrick
Patrick
12 years ago

Great article, J.D.

I agree, there are many benefits to having a bond like this. I no longer live in the town where I went to high school, but I do have a military background, which in many ways, allows me to transport similar benefits wherever I may roam. But it’s just not quite the same as knowing someone for 20 years. 😉

Erika
Erika
12 years ago

I’m not convinced that It’s a Wonderful Life is a great example. George keeps his incompetent uncle employed at the Savings and Loan out of charity and against his better judgment. It’s his uncle’s incompetence that leads to George’s impending catastrophe.

RacerX
RacerX
12 years ago

The best salespeople and politicians (one and the same?)share a natural talent for making all clients personal. In a a former life I was a buyer for a sucessful catalog company and we basically had a rule; NEVER pick up the phone at the end of the month! We would be flooded by every Tom, Dick and Harry with a quota. But there were one or two that would call 75% of the time to check in, wish you a Happy Birthday(on the right date too)call when a new kid was born, etc.. They would also NEVER bring up past… Read more »

Flexo
Flexo
12 years ago

I’ve been growing some “social capital” at work recently, and it looks like it got me some visibility… could play out well in the future. (I also just happened to watch It’s a Wonderful Life again the other day. It’s an interesting movie.) Great post!

JenK
JenK
12 years ago

Thanks Roger for pointing out that a sour deal is harder to cope with if you know the person.

Some people WILL work harder to not sour a deal if it’s with someone they know. But others, unfortunately, will expect more “slack” or “understanding” from someone they know … it’s a two-edged sword, sometimes.

And sometimes you’d rather deal with a total stranger. Say, if you need to buy, oh, supplies or treatments for certain intimate “issues” at the pharmacy. (At least there is drugstore.com!)

Ed
Ed
12 years ago

Social capital seems to have a compounding factor as well, don´t you think? There is a commencement address by Steve Jobs, where he says ” Its hard to connect the dots going forward” or something like that. I think this is esp true of social capital, when you join a club or some kind of social activity you meet people who have similar interests and social capital to share with you, and you have social capital to share with them.

TiredinTucson
TiredinTucson
12 years ago

As someone who lives 1200 miles away from the place I graduated high school, I understand social capital, and I think it works well when people are competent. It can cause a lot of grief when people do poor work or burn bridges, so there is a flip side. It is hard for me to function at times, because I was so accustomed to knowing everyone in the small town I grew up (I now live in Tucson, a city of about 400,000 at present). I have found an honest mechanic, but for the life of me I can’t find… Read more »

Jake
Jake
12 years ago

So true! I see people I went to school with off and on when I travel home for holidays and such. These people I went to school with I feel a bond with that I can’t explain. In fact, I am closer now with many of my friends from high school than anyone else. We talk on the phone and email all the time. I tend to think the Internet and cell phones have transformed our society in ways we don’t really recognize. Today we can stay in touch much easier than ever before.

Tom
Tom
12 years ago

I think this is one of the driving forces behind p2p lending – Prosper, Lending Club, etc.

You believe in the people you have connections with, even if they are loose connections based on shared memberships or geography.

Dave C
Dave C
12 years ago

This is a topic I hate thinking about. I have always been rather reserved. I’m social enough with a few close friends, but despise being put into positions where I have to socialize with strangers or meet new people. And that’s just the way I am. I’ve recently come to be at peace with that, but then stuff like this comes up. I know it’s going to hurt me in my career. So far the fact that I do my job well has outweighed that I don’t go to dinner/the bar after work, don’t participate in idle chitchat, heck, no… Read more »

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